Market Competitive Intensity (MCI): Philippines

Datamonitor's MCI Index offers a robust framework for measuring the development of utility Market Competitive Intensity. The MCI assessment draws on nine underlying metrics grouped into three broad clusters: Market framework; Supplier Push; Customer Pull.

Report Highlights
MCI scores are calculated using two different methods. The first, the simple weighted average (additive) measure shows overall competitive intensity. The second, the multiplicative method, is more complex. It prevents markets with an overly wide spread of underlying raw scores from exerting undue influence over, or skewing, the final result.

Liberalisation, energy pricing issues and environmental concerns will remain key drivers of gas and power market dynamics throughout the MCI forecast period.
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DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
ANALYSIS 2
Introduction: Datamonitor's MCI Index offers a robust framework for measuring the development of energy Market Competitive Intensity 2
The MCI Index shows how attractive a particular market is to new entrants in terms of the competitive environment 3
The MCI assessment draws on nine underlying metrics grouped into three broad clusters: market framework, supplier push, customer pull 3
The MCI Index measures the development of 20 diverse Asia Pacific gas and power markets 4
The MCI Index assesses markets in December 2007, and on July 1, 2010, in addition to driving a market switching forecast 4
Each of the nine pillars has an assessment scale to allow for the comparison of diverse markets (see appendix for more details) 5
Two differing overall MCI scores are calculated to ensure full clarity of results 5
A simple weighted average (additive) measure shows overall competitive intensity 5
A weighted multiple (multiplicative) measure shows overall competitive intensity 5
The MCI framework has a number of applications for your organization 6
Context: The Philippines's gas and power markets are both lacking in meaningful competitive intensity 7
The Philippines power market has an effective regulator which adds strength to the market framework but the supplier push and customer pull are weak resulting in a lower MCI score 7
The speed of development seen in the Philippines gas market outstrips that in many other markets 8
Power MCI: A number of the Philippines' metrics remain at the bottom end of the scale 9
Apart from the regulatory score, Market Framework metrics remain weak 9
Effectiveness of regulator [2007: 6/10 2010: 7/10] 9
Effectiveness of balancing and data transfer [2007: 0/10 2010: 2/10] 10
Supplier Pull scores are supported by the fragmented retail market 10
Wholesale market fragmentation [2007: 2/10 2010: 4/10] 10
Retail market fragmentation [2007: 8/10 2010: 9/10] 10
Traded market maturity [2007: 1/10 2010: 2/10] 10
Customer Pull scores remain modest under the current market structure 10
Access to market information and assistance [2007: 2/10 2010: 2/10] 10
Government sources and the suppliers themselves remain the key elements of market information and assistance to consumers. 10
Consumer representation [2007: 2/10 2010: 3/10] 10
Propensity to switch [2007: 0/10 2010: 2/10] 10
Gas MCI: The Philippines' gas market score is driven by Market Framework factors 11
Market Framework scores all score above the mid point of the scale by 2010 11
Effectiveness of regulator [2007: 3/10 2010: 5/10] 11
Ease of third party access [2007: 5/10 2010: 7/10] 12
Third party access to essential utilities, such as transmission, distribution and related facilities, has been made mandatory but can be deferred during the initial years of a project. Access conditions are negotiated, however, the issue that remains in the sector is whether or not any capacity expansion by transmission and distribution utilities will be brought under the third party access rule. Since the country has clear third party access guidelines, a higher score is received and is expected to improve as and when the scope of that access covers expansion projects. 12
Effectiveness of balancing and data transfer [2007: 5/10 2010: 6/10] 12
The balancing regime is relatively well defined given the current stage of market opening hat has been achieved. 12
Supplier Push factors remain modest 12
Wholesale market fragmentation [2007: 1/10 2010: 1/10] 12
Retail market fragmentation [2007: 2/10 2010: 5/10] 12
Customer Pull metrics remain limited over the forecast period 12
Access to market information and assistance [2007: 1/10 2010: 2/10] 12
Consumer representation [2007: 0/10 2010: 1/10] 13
Propensity to switch [2007: 0/10 2010: 1/10] 13
Outlook: Commercial opportunities in the Philippines energy sector remain minimal 14
MCI Scores 15
APPENDIX 18
Definitions 18
Ask the analyst 23
LIST OF TABLES
Table 1: Market Competitive Intensity, Philippines 2007-10 15
Table 2: MCI additive, Asia Pacific 2007-2010 16
Table 3: MCI multiplicative, Asia Pacific 2007-2010 17
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Table 1: Market Competitive Intensity, Philippines 2007-10 15
Table 2: MCI additive, Asia Pacific 2007-2010 16
Table 3: MCI multiplicative, Asia Pacific 2007-2010 17
Figure 1: MCI assessment scale 3
Figure 2: MCI assessment framework 3
Figure 3: MCI market coverage 4
Figure 4: MCI scales 5
Figure 5: MCI Applications 6
Figure 6: Asia Pacific power Market Competitive Intensity, 2007-10 7
Figure 7: Asia Pacific gas Market Competitive Intensity, 2007-10 8
Figure 8: Power Market Competitive Intensity index, the Philippines 9
Figure 9: Gas Market Competitive Intensity, Philippines 11
Figure 10: Market Competitive Intensity, Philippines 14
Figure 11: Scale for MCI assessment, effectiveness of regulator 18
Figure 12: Scale for MCI assessment, ease of third party access 19
Figure 13: Scale for MCI assessment, effectiveness of balancing and data transfer 19
Figure 14: Scale for MCI assessment, wholesale market fragmentation 20
Figure 15: Scale for MCI assessment, retail market fragmentation 20
Figure 16: Scale for MCI assessment, traded market maturity 21
Figure 17: Scale for MCI assessment, access to market information and assistance 21
Figure 18: Scale for MCI assessment, consumer representation 22
Figure 19: Scale for MCI assessment, propensity to switch 22
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